My husband and I have joked that our 2006 purchase of a townhome in a blue-collar suburb of Chicago must have been the single transaction that popped the housing price bubble in America. Within weeks after we signed the papers, the housing market began a historic slide that hasn’t yet hit bottom.
We paid $193,000 for our property. Today, it is worth $101,000 – if we could find a buyer for it. We are now so underwater on our mortgage, I see coral reefs every time I write a mortgage check. If housing prices stopped declining today and prices began to appreciate 5 percent a year, it would take more than 13 years for the price of our house to climb back to the price we paid for it. Those calculations are far rosier than the cold reality that at middle age, we probably won’t live long enough to see the prices return to the numbers we paid in the good old bubble days of 2006.
Eighty percent of the homes on the market in our town are foreclosures. We find ourselves wondering if we could simply walk away from this bad investment. If only it were as easy as dumping a bum stock and writing off the loss.
More and more people have decided that it is. Earlier this year, CBS’s 60 Minutes highlighted the growing trend toward strategic default. Last year, nearly 11 million Americans were underwater on their mortgages. That’s a whole lot of potential walkaways.
We’ve already refinanced once, a nightmare that took nearly a year. Even so, we couldn’t rent the place for what our costs are each month. We are grateful that we’ve been able to write that mortgage check each month, which puts us in a better position than many in this economy. But we are aware that a couple of corporate bottom-line decisions could change our financial status overnight.
A strategic default will wreck our carefully cultivated high credit score for at least seven years, but those in the strategic default camp insist that the financial benefits usually outweigh the negatives. It isn’t hard to embrace the logic. Freedom from the obligation of home ownership would allow us to rent a property at a far more reasonable monthly outlay than our current mortgage permits. We don’t want to sink our money into another house. Not after our current experience. We can’t afford it anyway.
I’ve heard a few in the strategic default camp who have cited Jesus’ parable of the ten minas as their rationale for walking away from a bad investment. But the context of the passage has far more to do with kingdom faithfulness and courage than it does with a 30-year fixed FHA mortgage.
And there’s the dilemma. As much as we fantasize about doing a midnight move, we can’t escape the fact that there are moral components and spiritual ramifications to the question of strategic default.
Secular and Christian sources alike insist that strategic default is not merely a financial decision. Though a mortgage document focuses on the financial obligations to which lender and borrower agree, some mortgages also include a moral clause, stating that a borrower has a responsibility to repay the lender. To be honest, there’s a part of me that chafes at this legal language, because both the government and the financial industry have not been particularly ethical when it comes to their end of the agreement. However, Scripture unblinkingly buttresses the notion of fulfilling our vow to pay our mortgage in spite of the sleazy lender who signed the documents with us.
We never had a deep sense of calling to this community. We prayerfully purchased our townhouse using the accepted financial logic of the time: “We’ve relocated, and we need to find a home with enough space to launch our young adult kids. This is what we can afford in this crazy housing market. We’ll stay a few years, then move on.” Reminder to self: Our plans are not God’s plans.
But the lack of “calling” does not exempt us from a sense of responsibility for those living beside us. All of our remaining neighbors are impacted equally by the “Bank Sale” signs and foreclosure notices that are as plentiful as dandelions in this neighborhood. Though we live in a community that seems to be built of closed garage doors and silent streets, we have attempted, however unsuccessfully at times, to build relationships here. We have prayed for our neighbors during our five years at this address. We may discover an escape clause of some kind in our mortgage documents, but is there a loophole in Jesus’ command to love our neighbors as we love ourselves? Since we know the answer to the latter question is no, then what does loving our neighbors look like in relation to our home ownership dilemma?
There are no easy answers. We’re searching for a lawyer and a financial adviser to help us parse our situation. However, even before we schedule a meeting, we need to ensure we have some clarity before God about our definitions. Have we been wrong about viewing our home as an investment? One thing I do know for sure: This underwater “investment” has been both laboratory and classroom, run by the One who calls himself our shelter, designed to school us in the costly basics of obedience.
